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The War on Poverty and a Battle Plan for Inner City Victory

In 2014, I was honored to speak at an inspiring convening of over 400 California leaders committed to tackling poverty in their communities. The Southern California Association of Governments and the Southern California Leadership Council organized The Fifty Years into the War on Poverty Summit to cultivate a broad coalition of stakeholders to help find solutions to poverty in their region.

As with the nation as a whole, Southern California encompasses significant wealth and extreme poverty. The share of residents living below the poverty level in the region increased from 13 percent to 18 percent over 1990-2012. At the time I spoke, one in four children in the region lived below the poverty line. Clearly, the war on poverty had not been won.

Although poverty exists (and is growing) everywhere—in rural, suburban and urban areas—at ICIC we are unapologetically focused on poverty in inner cities, those distressed pockets of concentrated urban poverty and unemployment. While we cautiously celebrate the revival of many of our nation’s cities and the increased economic opportunities associated with vibrant downtowns, we know that inner cities still exist.

ICIC has spent the last decade analyzing the state of inner cities and there has been very little improvement. Of the 100 largest cities, only six have experienced declining poverty and unemployment rates. In U.S. cities with over 75,000 people, 328 (75 percent) have inner cities.

Poverty remains overwhelmingly concentrated within inner cities, where three out of 10 people still live in poverty. The inner city poverty rate is 32 percent, compared to nine percent in other areas of cities. Across the U.S., inner cities account for nearly one-quarter of U.S. poverty and over one-third of minority poverty.

Inner cities seem to be left behind during periods of economic growth and are disproportionately impacted by recessions. In addition, they do not significantly benefit from regional growth. The correlation between regional and inner city growth is only eight percent for inner cities in the largest 100 cities.

But inner cities also are areas of opportunity. They are a competitive place to do business, offering strategic locations near major transportation hubs, an underutilized workforce and underserved markets. After more than two decades of studying and advising over 50 cities, at ICIC we have learned about what works in inner cities.

There are three key drivers of inner city growth. The first is improving the local business environment by investing in infrastructure and workforce development and pursuing anchor strategies to capture shared value opportunities. Implementing a cluster-based growth strategy is the second driver. Finally, cities need to support the growth of inner city businesses by providing capital connections, contracting opportunities and capacity building. For each of these drivers, specific strategies such as those highlighted below can maximize impact.

For example, while individual anchor institutions, such as universities, hospitals, and large corporations, can play a significant role in improving local economic conditions, they have the potential to transform communities with more comprehensive initiatives when they collaborate. The Greater University Circle in Cleveland is one notable example. In 2005, the Cleveland Foundation initiated this trailblazing partnership with leading anchor institutions, philanthropies, financial institutions, community groups, and the city. They have implemented a local purchasing initiative, have created a worker-owned cooperative and provide job training and preferred access for local hires. They continue to work on transit-oriented development, housing and neighborhood safety.

In a similar manner, while strengthening clusters is important to inner city economic growth in general, focusing on clusters that have the greatest direct impact on inner cities has the potential to foster more inclusive growth. Some traded clusters, for example, may do better than others in spurring the growth of inner city firms and employing local residents. In addition, local clusters may offer more mid-wage employment opportunities accessible to a wide range of workers than most traded clusters. And strengthening local business-to-business clusters, versus those serving consumers, may be an important tool to support high-growth inner city firms.

Understanding the geography of poverty is critical to inform effective policies. Here at ICIC we know that in the absence of specific commitments to distressed urban areas, economic development plans will not significantly address urban poverty. Because poverty and unemployment are concentrated in inner cities, economic growth strategies that target inner cities allow for a wholesale approach to increasing economic opportunities for the residents that need it the most. If we truly care about alleviating urban poverty, we must have a distinct set of strategies unique to inner city economies.